In the context of online trading, volume stands out as one of the critical metrics determining market mechanically. Whether it is about day trading in forex, scalping the indices, or assessing long-term market trends, the difference between tick volume and real volume on MT5 (Meta Trader 5) is significant. It is vital to the trading strategy and reliability of forecasts. For traders relying on MT5 indicators for market interpretation, understanding differences between these two indicators is pivotal for precision.
No doubt the difference between tick volume and real volume is of interest to advanced traders, beginners and intermediate traders will surely face the gap in comprehension. They may look familiar on a graph, and thus, intertwined. In the context of modern instant funding prop trading firms, understanding these concepts becomes imperative. More so, given how closely the performance metrics are monitored, these concepts are of concern.
Let’s look closely at the concepts of your concern and their digital application within the context of the MT5 trading platform.
What is Tick Volume?
Within a given timeframe, tick volume is the total number of price changes or “ticks”. Price movement is a prerequisite and it can occur upwards or downwards. Hence, a rise in price movement leads to increase in tick volume
In forex trading where there are no centralized exchanges and actual trade volumes are difficult to measure, tick volume serves as the leading substitute for assessing trading activity. Most brokers using MT5 offer tick volume information as it is more difficult to compile and transmit, because it does not require aggregating actual trade sizes, rather only counting price movements.
Tick volume does not provide the amount of an asset traded, only if a trade occurred or price update happened. However, it is a good indicator of market sentiment, specifically for forex in the case of tick volume.
What is Real Volume?
On the contrary, Real Volume calculates the total number of contracts, lots, or shares traded in a period of time. This information helps traders to have more transparency of the actual activity in the market.
Real volume is only accessible for instruments like futures, stocks, and certain commodities. Because forex is a decentralized market, the lack of a centralized exchange to capture all trading activity results in sparse real volume information. Some brokers may offer aggregated volumes from liquidity providers, but it is uncommon.
On MT5, access to real volume data is restricted based on the instrument and the data feed offered by the broker. Certain brokers may provide real volume access for CFDs or stocks, while others may still depend entirely on tick volume.
Why Tick Volume is Used for Forex on MT5
The architecture of MetaTrader 5 integrates both centralized and decentralized markets. In the context of forex trading, the decentralized characteristic of the market volume means that MT5 cannot capture real volume without a consolidated order book— which is a broker rarity.
Thus, MT5 resorts to tick volume for the majority of forex instruments. For most of the forex instruments, the platform’s internal engine captures every bid and ask price fluctuation and computes that to the tick volume chart that feeds your MT5 indicators.
MetaTrader’s developers undertook a considerable amount of research on the relationship of tick volume and real volume for exchange-traded instruments. Remarkably, they identified a strong relationship between both of them. This demonstrates that tick volume, while not a measure of the volume of trades, may serve as a dependable proxy for market activity.
Actual Volume Metrics of Other Instruments on MT5
When trading assets such as stocks and futures via MT5, and if your broker supplies the appropriate information, you might notice actual volume figures appearing directly on your charts. This is beneficial for traders who wish to analyze actual volume alongside price movement for volume-based trading strategies.
In these situations, the actual volume data reveals the hidden institutional involvement during the accumulation or distribution phases. Users of MT5 with indicators such as Volume Profile or OBV can utilize the information for better signal precision.
Though, this data is not available for all brokers and even less have instruments for MT5 that provide actual exchange-traded volume data. This is particularly critical to check with your broker if your trading approach relies on volume analysis.
Tick Volume and Its Associated Trading Approaches
For forex traders, particularly those with instant funding accounts with proprietary trading companies, tick volume is critical in determining strategy. These proprietary trading companies tend to place a lot of weight on a trader’s evaluation to determine their performance within a short period. Therefore, tools designed from within to help capture the momentum, reversal, or breakout are a necessity.
Tick volume verifies price movements. For instance, the occurrence of a breakout accompanied by increased tick volume suggests it is a high probability breakout. On the other hand, a breakout accompanied by decreased tick volume is likely to be a false breakout or insubstantial move by traders.
A number of indicators on MT5 work with tick volume including Volume Oscillators, Accumulation/Distribution indicators and custom scripts estimating volume strength. It is also possible for traders to create Expert Advisors (EAs) that execute trades only when predetermined tick volume levels are met, thus bypassing additional trades during prevailing unfavorable market conditions.
Volume’s Importance in Instant Funding Challenges
Instantly funded prop firms, that immediately allocate capital to traders after a cursory evaluation, often check for risk management parameters like drawdown and account activity. These firms are at a disadvantage when it comes to tick or real volume as their prop traders do not have the same volume risk.
Volume as a whole is a frequently overlooked dimension, especially for novice traders. In the current scenario, traders focusing on volume-based strategies in MT5 are likely to outperform their competitors. In order to gain the most out of trades, tick volume must be mastered in order to accurately identify entry and exit points, as well as avoid low-liquidity periods that may lead to increased slippage or widening spreads.
Adhering to instant funding company policies on trading limits and conditions requires a deep understanding of market volume.
Custom Indicators and Volume Metrics in MT5
Everything in MT5 can be modified, and traders can develop and import their MT5 indicators. This feature can be especially useful for traders who have run through all of the MT5 built-in volume indicators and still feel unsatisfied, as the market offers a lot of custom indicators for tick and real volume interpretation.
Custom tick volume indicators range from simply showing volume increase and decrease, showing volume divergences, and even alerting the user when a certain volume level is reached. Some refine volume interpretation by using statistical filters, prescriptive models, or even machine learning. This allows traders to enrich their strategies which can be based on personal preferences or proprietary methodologies.
The use of these tools can lead to the improvement of decision-making when combined with the precision of instruction execution, especially in aggressive trading strategies like scalping or trading on news.
Conclusion
Recall that both tick volume and real volume have their unique characteristics, and both can be powerful aids when used properly. Most forex traders on MT5 will be using tick volume because of the over-the-counter characteristic of the market. Although this may appear as a drawback, research and experience show that tick volume approximation is a good reflection of real market activity.
For traders taking part in instant funding programs, or those developing their own strategies with MT5 indicators, the distinction is important. It leads to more precise confirmations of trades, optimal execution and timing, and enhanced performance in stressful situations.
Traders can use volume, whether real or tick, and the powerful analytical capabilities of MT5 to position themselves for improved trading outcomes, more consistent results, and the opportunity to access considerable trading capital through instant funding funds.
The focus is not merely volume, but how the volume data can be analyzed and utilized in actual trading situations. With the right resources and volume data can be used as a trading edge as opposed to just a chart element.
